Name change should be good for bottom line: Marine to become Centennial as holding company consolidates banks

Sep 21, 2008 (Florida Keys Keynoter - McClatchy-Tribune News Service via COMTEX) -- CBNC | Quote | Chart | News | PowerRating -- Sep. 21--Marathon-based Marine Bank will become Centennial Bank in mid-December, as bank holding company Home Bancshares Inc. consolidates its six regional banks under the same charter and a common name.

It's a move that Marine Bank hopes will improve the look of its bottom line, which is being weighed down by concerns over the mortgage meltdown plaguing banks nationwide.

Marine Bank's balance sheet took a hit in March, when the bank put $3.398 million into its loan and lease loss provision -- money set aside to cover defaults. That left the bank showing a net income loss of $1.237 million as of June 30 -- in sharp contrast to a gain of a similar amount a year earlier.

Chief Executive Officer Hunter Padgett says the transfer was made with the blessing of Arkansas-based Home BancShares, which was growing increasingly concerned about Florida's real estate market.

Marine Bank only has about a half-dozen foreclosures in progress, but Padgett says the reserve is a hedge against any problems down the road.

It's a positive, he says, that looks like a negative.

"I'm in the top 8 percent of all banks" for the amount of reserves to outstanding loans, Padgett says.

Building those reserves is in keeping with the conservative nature of both the bank and its parent, he says, but it's taken a toll by the numbers. Marine received a one-star rating (out of a possible five) from Bankrate.com, which rates the financial health of banks using publicly available information. But Padgett also points to a more positive B-minus from TheStreet.com.

Padgett is confident the combined strength of Home BancShares' regional banking group will turn the local bank's next rating to five stars.

Home BancShares is a $2.6 billion bank holding company. It reported second-quarter earnings of $5.7 million, compared to $5.1 million for the second quarter of 2007.

While Florida's troubled real estate market has put a crimp in the local bank's liquidity, the Arkansas banks are in growth mode as natural gas helps fuel an economic boom in that state.

The bank consolidation was approved Sept. 3 by the holding company's board of directors and each bank's board. The other affected banks are all in Arkansas: First State Bank, Conway; Community Bank, Cabot; Twin City Bank, North Little Rock; Centennial Bank, Little Rock; and Bank of Mountain View, Mountain View.

It comes as a result of an efficiency study, Padgett said, and will save money across the separate banks. For instance, having banks operating under six separate charters meant the expense of six different annual audits and Federal Deposit Insurance Corp. charges.

Padgett said the consolidation will cost Marine Bank about 14 jobs, as much of the work now done at the Marathon operations center will soon be handled in Conway, Ark., where Home Bancshares is headquartered.

Padgett said he's trying to lessen the sting by not filling jobs as they come open and working to find new positions -- inside or outside the bank -- for the remaining workers. Marine Bank employs 107 people across a dozen branches.

Otherwise, Padgett said, the transition should be fairly seamless for Marine Bank customers. No branches will close, he said, and none of the positions cut will affect staff that customers commonly come in contact with, such as tellers and loan officers. Bank management and the board of directors will stay the same, Padgett said, and lending decisions will continue be made locally.

"They're serious about local control," Padgett says of Home BancShares.

Marine Bank was founded in Marathon in 1995 by Bill Daniels, who now serves as vice chairman of its board of directors. The bank has nine branches in the Keys and three in Southwest Florida.

Padgett said information technology and some support functions will remain in Marathon, but the consolidation of other behind-the-scenes roles will mean the bank's new $2.5 million operations center at 11290 Overseas Highway will have some open space.

Marine Bank has five apartments on the top floor of the center, which opened behind its main branch last fall. Padgett says the cost looks daunting, but he'd like to see whether it's possible to convert some of the newly available space to additional affordable housing.

The current climate is challenging for banks, but Padgett is bullish about Marine Bank's future. He sees the rush to historically stable investments as a positive sign for his bank as it looks to build deposits.

"We've been conservative all these years, we're with a really strong holding company, and we hope people recognize that there's real value in the strength of the bank," he says.

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